Economy

GM to Pay $900 Million to Settle Criminal Charges over Faulty Ignitions

This 2005 Chevrolet Cobalt was involved in a fatal accident; its air bag did not deploy. (NHTSA photo)

US automaker General Motors will pay $900 million dollars to settle criminal charges related to faulty ignition switches in its vehicles that resulted in scores of deaths.

The defective ignition switches shut off cars while they were being driven, disabling airbags, power steering and power brakes, and putting vehicle occupants at risk of death or serious injury as a result. Fixing the defective parts would have cost GM less than a dollar per part. Failing to fix the problem cost at least 124 lives and now, nearly a billion dollars.

Lawyers representing relatives of victims killed due to the defective ignition switches accused GM executives of covering up the defects for years before the 2014 recall that brought widespread public attention to the issue. GM has admitted to knowing about the problem for nearly a decade prior to recalling millions of vehicles. Internal company documents from 2005 revealed engineers decided that replacing the flawed parts was not an “acceptable business case.”

The delay in action between the discovery of the defects and the recall was the reason behind the criminal charges filed by the Department of Justice. No individual GM executives were charged in the case, much to the dismay of some relatives of crash victims, who accuse the auto giant of buying its way out of accountability.

“While nothing can bring my daughter back, we need a system where auto executives are accountable to the public and not just corporate profits,” Laura Christian, whose 16-year-old daughter Amber Marie Rose was killed in a 2005 crash, told CNN Money. Christian called the settlement “grossly inadequate.”

Responding later in the day, Barra, who has repeatedly blamed “old GM” management for letting the ignition switch problem get out of hand, insisted the company has made “substantial changes.”

“People know we are sincere,” she said.

Under the terms of the settlement, GM must cooperate with the government, which will monitor some of automaker’s safety policies. Charges of conspiracy and wire fraud will be dropped after three years if GM complies with the settlement.

“The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” Barra said in a statement. “We have faced our issues with a clear determination to do the right thing.”